Annual report and consolidated financial statements · Trustees' Report for the Year Ended 31...

Annual report and consolidated financial statements For the period 1 September 2017 to 31 August 2018

Exeter Royal Academy for Deaf Education, a company limited by guarantee Registered office: 50 Topsham Road, Exeter, EX2 4NF Tel: (01392) 267023 | Company registration no. 6585703 | Registered charity no. 1124523

Exeter Royal Academy for Deaf Education

Contents

Reference and Administrative Details 1 to 2

Trustees' Report 3 to 8

Statement of Trustees' Responsibilities 9

Independent Auditor's Report on the Financial Statements 10 to 12

Consolidated Statement of Financial Activities incorporating Income and Expenditure Account 13 to 14

Consolidated Balance Sheet 15

Balance Sheet 16

Consolidated Statement of Cash Flows 17

Notes to the Financial Statements 18 to 41


Reference and Administrative Details

Trustees (Directors)

Mr A K Alexander (appointed 18 June 2018)

Mr P Burroughs, Honorary Treasurer and Chair

Mr D Brett (resigned 11 September 2017)

Mr A Collyer (resigned 2 October 2017)

Mr H Convey (resigned 2 October 2017)

Mr R Davey (appointed 5 October 2017)

Mr J Dewhirst

Mr J Eva (resigned 26 September 2017)

Miss R Goswell (resigned 20 September 2017)

Mr C Hampton II

Dr J Harvey

Ms S Honey (resigned 25 March 2018)

Mr S King, Vice Chair

Ms J T Sealey (appointed 18 June 2018)

Company Secretary

Mrs S Papworth FCCA

Key Management Personnel

Ms T Chappell, Vice Principal (from 1 September 2017 to 22 January 2018), Co-Principal (Education) (from 23 January 2018)

Mr S Dewing, Head of Safeguarding (from 1 September 2017 to 17 January 2018), Co-Principal (Safeguarding & Care) (from 18 January 2018)

Mr A Donkin, Executive Principal (resigned 28 February 2018)

Mrs K Burgess, Head of Care (resigned 31 January 2018)

Mr S Morton, Director of Development

Mrs S Papworth, Director of Finance & Resources Principal and Registered Office

50 Topsham Road Exeter Devon EX2 4NF

Company Registration Number

06585703


Reference and Administrative Details

PKF Francis Clark Statutory Auditor Sigma House Oak View Close Edginswell Park Torquay Devon TQ2 7FF

Bankers

National Westminster Bank Plc 59 High Street Exeter Devon EX4 3DP

Independent Auditors


Trustees' Report for the Year Ended 31 August 2018

The Trustees present their annual report together with the financial statements and auditors' report of the charitable company for the year ended 31 August 2018. The annual report serves the purposes of both a Trustees' report, and a Directors' report under company law.

The Charity, Exeter Royal Academy for Deaf Education (the Academy), operates a non-maintained, residential special school and an independent specialist college for students aged 4 to 24 years. Students are placed at the Academy by local authorities in England, Scotland and Wales. The Charity also operates a Children’s Home for deaf young people.

Structure, governance and management

Constitution

The Charity is a company limited by guarantee and is a registered charity. The charitable company's memorandum and articles of association are the primary governing documents of the Charity. The company registration number is 06585703, and the charity number is 1124523.

Under the provision of Section 30 of the Companies Act 2006, the company is entitled to omit the word "Limited" from its name.

The Trustees of Exeter Royal Academy for Deaf Education are also the directors of the charitable company for the purposes of company law.

Details of the Trustees who served throughout the year except as noted are included in the Reference and Administrative Details on page 1.

Members' liability

The company is limited by guarantee and has no share capital. In the event of a winding up the liability of the members is limited to £1 each.

Trustees and Governing Body

The Charity has a Board of Trustees which meets at least four times a year. Governance of the School and College is delegated to a Governing Body which meets at least six times a year.

Method of recruitment and appointment or election of Trustees

New Trustees are appointed at a meeting of the Trustees, following a formal application process. Suitability is determined by an interest in the work of the Charity, eligibility, personal competence, specialist skills and local availability. New Trustees are inducted into the workings of the Charity on joining by the Chair of Trustees, senior staff members and the Clerk to the Board of Trustees. Trustee training is continuous and is arranged at periodic intervals covering a variety of aspects of the work of the Charity, including changes in legislation, strategic planning, safeguarding and legal aspects of education and financial policy.

Organisational structure

During 2017-18 a quadrumvirate senior management structure was implemented by the Board of Trustees. Two Co-Principals are responsible for the education and care of Academy students and the Director of Finance & Resources and Director of Development have responsibility for the other functions of the Charity. Details of the key management personnel within the Academy are shown on page 1.The Trustees are responsible for determining and reviewing the pay and remuneration for these staff and use benchmark information from both the education and charity sectors to do this.


Trustees' Report for the Year Ended 31 August 2018 (continued)

Risk management

The Trustees are responsible for the management of risks affecting the Charity and have undertaken a review of risks associated with its activities. The key controls used by the Charity include:

• Formal agendas for all Trustees, Governing Body and sub-committee meetings • Detailed terms of reference for all committee meetings • Comprehensive strategic planning, budgeting and management accounting • Established organisational structure and lines of reporting • Formal written policies • Clear authorisation and approval levels • Safer recruitment processes as required by law to protect children and vulnerable adults • Monitoring of key performance indicators

The Trustees and senior managers have undertaken a review and analysis of risk, focusing on the major aspects of operational, financial, governance management, compliance and reputational risk. The work has given rise to steps and procedures to mitigate likely risks and to ensure regular monitoring of the primary areas of potential risk. The principal risks and uncertainties, together with a summary of how they are managed are set out below:

• Trustee recruitment and Board effectiveness – Board self-evaluation, regular training, support from external governance specialists

• Recruitment of specialist staff – high levels of investment in staff training, regular review to ensure competitive salaries and employee benefits are offered

• Safeguarding of students – intensive staff training, safeguarding systems have been strengthened and reviewed, a dedicated Safeguarding team has been established.

• Programme and financial risks associated with the construction of new facilities for the Charity to relocate to in April 2020 – professional project managers and other advisors appointed. Close scrutiny and monitoring of the project by Trustees.

Through the risk management process established by the Charity, the Trustees are satisfied that the major risks identified have been adequately mitigated where necessary. It is recognised that systems can only provide reasonable but not absolute assurance that major risks have been adequately managed.

Objectives and activities

Objects and aims

The Charity’s objects, which were revised with the permission of the Charity Commission in 2008, are as follows:

• to provide education, training, care, accommodation, leisure opportunities, welfare and other support services to deaf people and people who are not deaf but who, due to some other disability, would benefit from the same (principally though not exclusively from the counties of Devon, Cornwall, Somerset and Dorset) with the object of developing their personal, mental, physical and spiritual capacities so that they may realise their full potential as individuals and members of their communities and society as a whole and so that their condition of life may be improved; and

• to educate the general public in the needs and capabilities of deaf people with a view to achieving greater integration between deaf and hearing communities.



Objectives, strategies and activities

Students are the primary beneficiaries of the Academy’s work. The Academy enables students to learn with other deaf students, within a fully bilingual environment, supporting students to learn in both BSL and English depending on their level of needs and abilities. This allows students to acquire language and communication skills, and to develop socially and emotionally. In turn, this supports the students to excel educationally and to achieve independence. The families of the Academy’s deaf students also benefit from the support given to them and from the greater wellbeing and achievement of their child. The School and College run student councils which enables students to contribute to the decision making within the Academy. Open days are held for parents and carers, all parents and carers are also invited to the annual review of the education and care provided for their child. Parents and carers also receive newsletters (both email and paper versions) and can communicate with their child and their teachers and care workers through the video conferencing system. The Charity also operates a small Children’s Home for deaf young people.

Public benefit

The Trustees have given consideration to the Charity Commission’s general guidance on public benefit and in particular to its supplementary public benefit guidance on advancing education and on fee charging. The Charity provides specialist deaf education which benefits the students who attend the Academy’s School & College. Admission to the School & College is open to any student for whom the specialist education has been professionally assessed as appropriate to meet their needs. Fees are charged to allow costs to be recovered, these are usually funded by local authorities and the Education and Skills Funding Agency. Local Authorities benefit as the Charity enables them to meet their statutory responsibilities to educate children with hearing impairment. The wider community benefits as many of the Academy’s students participate in work-placements and other events in the community, raising awareness of deafness. The Charity also supports deaf young people who are in main stream educational settings and uses its speciality to assist other individuals and organisations who work with deaf young people. The Charity promotes the concept of reverse inclusion, where hearing people are invited into the deaf community in order to facilitate greater understanding and integration between the two groups. It also seeks to raise awareness of deafness and promote the capabilities of deaf people though publicity, partnership working, fundraising and similar activities.

Equality and Diversity The Academy is committed to the principles of Equality & Diversity in all aspects of its work. The Academy’s Equality & Diversity Policy articulates this commitment and ensures that all staff, students and volunteers are treated fairly and have equal access to learning programmes, facilities and employment opportunities.



Strategic Report

Achievements and performance Operational performance This financial year saw the Charity make enormous progress in realising its plans to relocate to new, world class facilities in Exmouth for the education and care of deaf students. Work on developing the design was concluded and a construction partner, Midas Construction Ltd, was selected. Since the year end, the Trustees approved the commencement of construction in February 2019. The Charity also completed the sale of its current site in Exeter in June 2018, which is the main funding source for the new build project. It is anticipated that the sale of the Hill Barton, Exeter site, where the Academy had previously intended to move, will be completed during the 2018-19 financial year with funds also being used for the Exmouth development. Since the Ofsted inspection in November 2016, when the School & College were graded as “inadequate” recruitment of new students has been minimal leading to a declining student roll which has had a significant negative effect on the financial position in 2017-18. However, in January 2019, a further full inspection was undertaken by Ofsted resulting in the removal of special measures. The inspection graded residential care as “good” and education as “requires improvement” with good features. The Children’s Home was also graded as “good”. Trustees have great confidence that the improvements recognised in the recent Ofsted inspection, the ambitious and passionate leadership team and the Charity’s investment in world class facilities will ensure a successful future for the Deaf Academy in the coming years.

Going concern

After making appropriate enquiries, the Board of Trustees has a reasonable expectation that the Charity has adequate resources to continue in operational existence for the foreseeable future. For this reason it continues to adopt the going concern basis in preparing the financial statements. Further details regarding the adoption of the going concern basis can be found in the Statement of Accounting Policies.



Strategic Report (continued)

Financial review

Reserves policy

The Trustees have reviewed the Charity’s needs for reserves in line with the guidance issued by the Charity Commission. The current level of reserves is considered essential to manage the impact of the changes in special educational needs (SEN) funding and the cash-flow requirements of the Charity’s new build project. The intention, when these issues have been resolved, is to aim for a reserves level equivalent to six months running costs, as this is generally considered to be good practice, providing stability and security to the Charity without being at an excessive level. The Trustees recognise that government policy, including austerity measures, and changes in the funding of special education provision has led to some uncertainty and volatility within the sector. As such, it is considered prudent to retain reserves at a level which reasonably secures the Charity’s ability to deliver its objects in the medium term. In addition, the Charity has committed to a very significant project to build new facilities from which to operate in future. The primary source of capital funding for the project is from the disposal of the Charity’s Exeter site which has now taken place. However, a major fundraising campaign is also underway. Whilst hugely exciting, the Trustees are aware that a capital project of this nature carries a high level of financial risk and cash-flow pressures which will inevitably arise as the project progresses. As such, it has been the Charity’s policy to accumulate reserves in order to deal with any project related financing issues. The Trustees are also mindful of the Charity’s long term liability in respect of its share of the deficit on the Local Government Pension Scheme, which is a defined benefit scheme. At the balance sheet date, this totalled £6.519m as calculated under Financial Reporting Standard (FRS) 102. Although no immediate cash-flow implications arise from this, the Trustees are aware that increases in contribution rates may be required as a result of the deficit and that this may impact adversely on operating cost in the future. The Charity’s freely available reserves are calculated at £6,467,372 at the balance sheet date. A significant proportion of the freely available reserves relates to the funds generated from the sale of the Topsham Rd, Exeter site. All amounts due for the purchase of the new site in Exmouth have been paid, except for the £400,000 deferred payment, in line with the sale contract.

The Charity’s total reserves have increased by £5,020,091 against the 31 August 2017 position. This results from the trading deficit of £915,143, the gains on investments of £39,081, the gain on disposal of fixed assets of £3,971,153 and the positive adjustment of £1,925,000 in respect of the decreased FRS 102 pension scheme liability.

Reserves are held within unrestricted funds containing investments of £262,171 and bank deposit funds of £7,074,607. The balance of unrestricted funds is held in other assets and liabilities, which includes a revenue account deficit resulting from the full adoption of FRS 102. From 2007-08 onwards, the Local Government Pension Scheme actuaries have treated the Charity as a single employer and therefore full provision of the pension deficit is required, this equates to £6,519,000 and is as shown on the face of the balance sheet; the Charity’s reserves are reduced accordingly. Investments are split between Fixed Interest and Equity Shares and held within Common Investment Funds.

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Statement of Trustees' Responsibilities

The Trustees (who are the directors of the charitable company for the purposes of company law) are responsible for preparing the Trustees' Report and the financial statements in accordance with United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) and the applicable law and regulations. Company law requires the Trustees to prepare financial statements for each financial year. Under company law the Trustees must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the charitable company and of its incoming resources and application of resources, including its income and expenditure, for that period. In preparing these financial statements, the Trustees are required to:

• select suitable accounting policies and apply them consistently;

• observe the methods and principles in the Charities SORP 2015;

• make judgments and accounting estimates that are reasonable and prudent;

• state whether applicable UK Accounting Standards [FRS 102] have been followed, subject to any material departures disclosed and explained in the financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charitable company will continue in business.

The Trustees are responsible for keeping adequate accounting records that are sufficient to show and explain the charitable company's transactions and disclose with reasonable accuracy at any time the financial position of the charitable company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the charitable company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. In so far as the trustees are aware:

• there is no relevant audit information of which the group's auditors are unaware, and

• the trustees have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information

The Trustees are responsible for the maintenance and integrity of the corporate and financial information included on the charitable company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.


Independent Auditor's Report on the Financial Statements to the Members of Exeter Royal Academy for Deaf Education

Opinion We have audited the financial statements of Exeter Royal Academy for Deaf Education (the ‘Charity') and its subsidiaries (the 'Group') for the year ended 31 August 2018, which comprise the Consolidated Statement of Financial Activities incorporating Income and Expenditure Account, Consolidated Balance Sheet, Balance Sheet, Consolidated Statement of Cash Flows and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards including FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

• give a true and fair view of the state of affairs of the Group and the Charity as at 31 August 2018 and of the Group's results for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

• the Trustees use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the Trustees have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information The Trustees are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.


Independent Auditor's Report on the Financial Statements to the Members of Exeter Royal Academy for Deaf Education (continued)

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinion on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit:

• the information given in the Strategic Report and Trustees' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the Strategic Report and Trustees' Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception In the light of our knowledge and understanding of the Group and the Charity and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Trustees' Report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the Charity, or returns adequate for our audit have not been received from branches not visited by us; or

• the financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of Trustees remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

Responsibilities of Trustees

As explained more fully in the Statement of Trustees' Responsibilities set out on page 9, the Trustees are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Trustees are responsible for assessing the Group's and the Charity's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Trustees either intend to liquidate the Group or the Charity or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.


Consolidated Statement of Financial Activities for the Year Ended 31 August 2018

(including Income and Expenditure Account)

Note

Unrestricted Funds

£

Restricted Funds

£

Total 2018

£

Income from: Donations and grants 2 51,360 17,410 68,770

Charitable activities:

School fees 3,695,318 - 3,695,318

Professional fees 684,767 - 684,767

New Build Fundraising Campaign - 169,866 169,866

Other trading activities 3 37,771 200 37,971

Investments 4 21,630 - 21,630

Other income 5 21,676 - 21,676

Total 4,512,522 187,476 4,699,998

Expenditure on:


Academy educational operations 5,396,243 14,922 5,411,165

Redevelopment expenditure 16,211 - 16,211

Raising Funds:

New Build Fundraising Campaign 170,817 16,871 187,688

Other 77 - 77

Total 6 5,583,348 31,793 5,615,141

Net (expenditure)/income (1,070,826) 155,683 (915,143)

Other recognised gains and losses

Gains/losses on investment assets 39,081 - 39,081

Actuarial gains/losses on defined benefit pension schemes 24 1,925,000 - 1,925,000

Gain on disposal of tangible fixed assets 3,971,153 - 3,971,153

Net movement in (deficit)/funds 4,864,408 155,683 5,020,091

Reconciliation of funds

Total Funds brought forward at 1 September 2017 2,277,094 844,988 3,122,082

Total Funds carried forward at 31 August 2018 7,141,502 1,000,671 8,142,173


Consolidated Statement of Financial Activities for the Year Ended 31 August 2017

(including Income and Expenditure Account)

Note

Unrestricted Funds

£

Restricted Funds

£

Total 2017

£

Income from: Donations and grants 2 47,745 5,621 53,366


School fees 4,760,921 - 4,760,921

Professional fees 545,767 - 545,767 New Build Fundraising Campaign - 31,466 31,466 Other trading activities 3 68,961 - 68,961 Investments 4 32,384 - 32,384

Other income 5 38,298 - 38,298

Total 5,494,076 37,087 5,531,163

Expenditure on:


Academy educational operations 6,366,117 24,835 6,390,952 Redevelopment expenditure 48,394 - 48,394 Post Enquiry Improvement Plan 472,634 - 472,634

Raising Funds:

New Build Fundraising Campaign 147,761 - 147,761 Other 18,811 - 18,811

Total 6 7,053,717 24,835 7,078,552

Net (expenditure)/income (1,559,641) 12,252 (1,547,389)

Other recognised gains and losses

Gains/losses on investment assets 127,397 - 127,397 Actuarial gains/losses on defined benefit pension schemes 24 (734,000) - (734,000) Impairment of tangible fixed assets (127,765) - (127,765)

Net movement in (deficit)/funds (2,294,009) 12,252 (2,281,757)

Reconciliation of funds

Total Funds brought forward at 1 September 2016 4,571,103 832,736 5,403,839

Total Funds carried forward at 31 August 2017 2,277,094 844,988 3,122,082


Consolidated Statement of Cash Flows for the Year Ended 31 August 2018

Note 2018

£ 2017

£

Net cash (outflow)/inflow from operating activities 19 (4,602,174) (1,050,089)

Returns on investments and servicing of finance 20 (227,220) 22,990

Capital expenditure and financial investment 21 10,949,734 409,397

Increase/(decrease) in cash in the year 22 6,120,340 (617,702)


Notes to the Financial Statements for the Year Ended 31 August 2018

1 Accounting policies

Statement of accounting policies A summary of the principal accounting policies adopted (which have been applied consistently, except where noted), judgements and key sources of estimation uncertainty, is set out below.

Basis of preparation The financial statements have been prepared under the historical cost convention with items being recognised at cost or transaction value unless otherwise stated in the notes to these accounts. The financial statements have been prepared in accordance with Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS102) (effective 1 January 2015) – (Charities SORP (FRS 102)), and with the requirements of the Companies Act 2006. The Charity constitutes a public benefit entity as defined by FRS102. The Charity is incorporated in England and Wales. The address of its registered office is given on page 1. The Trustees consider that there are no material uncertainties about the Charity’s ability to continue as a going concern. The functional and presentational currency is sterling.

Basis of consolidation The consolidated financial statements incorporate the financial statements of the company and its sole subsidiary undertaking. These are adjusted, where appropriate, to conform to group accounting policies. As a consolidated group statement of financial activities is published, a separate statement of financial activities for the parent company is omitted from the group financial statements by virtue of section 408 of the Companies Act 2006.

Income All incoming resources are recognised when the Charity has entitlement to the funds, certainty of receipt and the amount can be measured with sufficient reliability.

Grants

Grants are included in the Statement of Financial Activities on a receivable basis. The balance of income received for specific purposes but not expended during the period is shown in the relevant funds on the balance sheet. Where income is received in advance of entitlement of receipt its recognition is deferred and included in creditors as deferred income. Where entitlement occurs before income is received, the income is accrued.

Donations

Donations and legacies are recognised on a receivable basis where there is certainty of receipt and the amount can be reliably measured.

Other income

Fees receivable and charges for services are accounted for in the period in which the service is provided.


Notes to the Financial Statements for the Year Ended 31 August 2018 (continued)

1 Accounting policies (continued)

Expenditure Expenditure is recognised once there is a legal or constructive obligation to transfer economic benefit to a third party, it is probable that a transfer of economic benefits will be required in settlement and the amount of the obligation can be measured reliably. Expenditure is classified by activity. The costs of each activity are made up of the total of direct costs and shared costs, including support costs involved in undertaking each activity. Direct costs attributable to a single activity are allocated directly to that activity. Shared costs which contribute to more than one activity and support costs which are not attributable to a single activity are apportioned between those activities on a basis consistent with the use of resources. Central staff costs are allocated on the basis of time spent, and depreciation charges allocated on the portion of the asset’s use. All resources expended are inclusive of irrecoverable VAT.

Expenditure on raising funds

These are costs incurred in attracting voluntary income, and those incurred in trading activities that raise funds.

Charitable activities

These are costs incurred on the Charity's educational operations.

Tangible fixed assets Assets costing £1,000 or more are capitalised as tangible fixed assets and are carried at cost, net of depreciation and any provision for impairment. Where tangible fixed assets have been acquired with the aid of specific grants, either from the government or from the private sector, they are included in the Balance Sheet at cost and depreciated over their expected useful economic life. Depreciation is provided on all tangible fixed assets other than freehold land and assets under the course of construction, at rates calculated to write off the cost of each asset over its expected useful lives, per the table below. All fixed assets are initially recorded at cost, except for freehold and leasehold properties acquired before 31 August 2015. Up to and including 31 August 2015 it was the Trustees' policy to revalue freehold properties at depreciated replacement cost in the accounts due to the specialised nature of the asset as a result of the services provided by the academy. The Trustees adopted the transitional provisions of FRS 102, which provide that companies do not have to revalue tangible fixed assets. Previous valuations have been retained as deemed cost and have not been updated. A review for impairment of a fixed asset is carried out if events or changes in circumstances indicate that the carrying value of any fixed asset may not be recoverable. Shortfalls between the carrying value of fixed assets and their recoverable amounts are recognised as impairments. Impairment losses are recognised in the Statement of Financial Activities.

Asset class Depreciation method and rate Freehold buildings 50 years straight line

Plant and equipment 20% straight line

Motor vehicles 20% straight line




Liabilities

Liabilities are recognised when there is an obligation at the balance sheet date as a result of a past event, it is probable that a transfer of economic benefit will be required in settlement, and the amount of the settlement can be estimated reliably. Liabilities are recognised at the amount that the Academy anticipates it will pay to settle the debt or the amount it has received as advanced payments for the goods or services it must provide.

Provisions

Provisions are recognised when the Academy has an obligation at the reporting date as a result of a past event which it is probable will result in the transfer of economic benefits and the obligation can be estimated reliably. Provisions are measured at the best estimate of the amounts required to settle the obligation. Where the effect of the time value of money is material, the provision is based on the present value of those amounts, discounted at the pre-tax discount rate that reflects the risks specific to the liability. The unwinding of the discount is recognised within interest payable and similar charges.

Leased assets The costs of operating leases are charged to the Statement of Financial Activities on a straight line basis over the lease term.

Investments Fixed asset investments are included at market value at the balance sheet date. Realised gains and losses on investments are calculated as the difference between sales proceeds and their market value at the start of the year, or their subsequent cost, and are charged or credited to the statement of financial activities in the year of disposal. Unrealised gains and losses represent the movement in market values during the year and are credited or charged to the statement of financial activities based on the market value at the year end.

Stock Stock and work in progress is valued at the lower of cost or net realisable value.

Financial Instruments The charity only holds basic financial instruments as defined in FRS 102. The financial assets and financial liabilities of the charity and their measurement basis are as follows:

Financial assets - trade and other debtors are basic financial instruments and are debt instruments measured at amortised cost. Prepayments are not financial instruments. Amounts due to the charity’s wholly owned subsidiary are held at face value less any impairment.

Cash at bank - is classified as a basic financial instrument and is measured at face value.

Financial liabilities - trade creditors, accruals and other creditors are financial instruments, and are measured at amortised cost. Taxation and social security are not included in the financial instruments disclosure definition. Deferred income is not deemed to be a financial liability, as the cash settlement has already taken place and there is an obligation to deliver services rather than cash or another financial instrument. Amounts due to charity’s wholly owned subsidiary are held at face value.




Taxation

The Charity is exempt from taxation to the extent that its income and gains are applied exclusively for charitable purposes.

Pension benefits Retirement benefits to employees of the Charity are provided by the Teachers’ Pension Scheme (‘TPS’) and the Local Government Pension Scheme (‘LGPS’). These are defined benefit schemes and the assets are held separately from those of the Charity. The TPS is an unfunded scheme and contributions are calculated so as to spread the cost of pensions over employees’ working lives with the Charity in such a way that the pension cost is a substantially level percentage of current and future pensionable payroll. The contributions are determined by the Government Actuary on the basis of quadrennial valuations using a prospective unit credit method. As stated in the notes to the financial statements, the TPS is an unfunded multi-employer scheme with no underlying assets to assign between employers. The TPS is therefore treated as a defined contribution scheme for accounting purposes and the contributions recognised in the period to which they relate. The LGPS is a funded scheme and the assets are held separately from those of the Charity in separate trustee administered funds. Pension scheme assets are measured at fair value and liabilities are measured on an actuarial basis using the projected unit credit method and discounted at a rate equivalent to the current rate of return on a high quality corporate bond of equivalent term and currency to the liabilities. The actuarial valuations are obtained at least triennially and are updated at each balance sheet date. The amounts charged to operating surplus are the current service costs and the costs of scheme introductions, benefit charges, settlements and curtailments. They are included as part of staff costs as incurred. Net interest on the net defined benefit liability/asset is also recognised in the statement of financial activities and comprises the interest cost on the defined benefit obligation and interest income on the scheme assets, calculated by multiplying fair value of the scheme assets at the beginning of the period by the rate used to discount the benefit obligations. The difference between the interest income on the scheme assets and the actual return on the scheme assets is recognised in other recognised gains and losses. The charity also operates a defined contribution pension scheme for certain employees. The assets of the scheme are held separately from those of the charity and are independently administered. The amount charged to the SOFA represents the contributions payable to the scheme in respect of the year.

Fund accounting Unrestricted income funds represent those resources which may be used towards meeting any of the charitable objects of the Academy at the discretion of the Trustees. The charity has several restricted funds. Details of the nature of these funds are given in note 16.

Critical accounting estimates and areas of judgement Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.




Critical accounting estimates and assumptions

The Charity makes estimates and assumptions concerning the future. The resulting accounting estimates and assumptions will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. The present value of the Local Government Pension Scheme defined benefit liability depends on a number of factors that are determined on an actuarial basis using a variety of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate. Any changes in these assumptions, which are disclosed in note 25, will impact the carrying amount of the pension liability. Furthermore a roll forward approach which projects results from the latest full actuarial valuation performed at 31 March 2016 has been used by the actuary in valuing the pensions liability at 31 August 2018. Any differences between the figures derived from the roll forward approach and a full actuarial valuation would impact on the carrying amount of the pension liability.

Subsidiary undertaking The financial statements include the results of Exeter Deaf Academy Trading Limited, a wholly owned subsidiary. Further details of the subsidiary and its results are set out in note 11.

2 Donations and grants

Unrestricted funds

£

Restricted funds

£

Total 2018

£

Total 2017

£ Grants 48,111 17,410 65,521 51,361 Donations and sponsorship 5 - 5 2,005 Legacies 3,244 - 3,244 -

51,360 17,410 68,770 53,366

3 Other trading activities

Unrestricted funds

£

Restricted funds

£

Total 2018

£

Total 2017

£ Hire of facilities 11,756 - 11,756 13,518

Other fundraising income 6,013 200 6,213 33,917

Other income 20,002 - 20,002 21,526

37,771 200 37,971 68,961



4 Investment income

Unrestricted funds

£

Total 2018

£

Total 2017

£ Bank interest receivable 2,801 2,801 1,584 Other investment income 18,829 18,829 30,800 21,630 21,630 32,384

5 Other income

Unrestricted funds

£

Total 2018

£

Total 2017

£ Pupil Premium Income 12,249 12,249 17,581 Other Educational Fees 9,427 9,427 20,717 21,676 21,676 38,298

6 Expenditure

Staff costs

£ Premises

£ Other costs

£

Total 2018

£

Total 2017

£ Charitable activities:

Academy's educational operations

Direct costs 2,958,168 - 205,524 3,163,692 3,761,144 Allocated support costs 965,108 561,177 721,188 2,247,473 2,629,808 3,923,276 561,177 926,712 5,411,165 6,390,952



6 Expenditure (continued)

Staff costs

£ Premises

£ Other costs

£

Total 2018

£

Total 2017

£ Redevelopment expenditure Allocated support costs - - 16,211 16,211 48,394 Post Enquiry Improvement Plan Allocated support costs - - - - 472,634

Raising funds:

New build fundraising campaign

134,321 - 53,367 187,688 147,761

Other - - 77 77 18,811

4,057,597 561,177 996,367 5,615,141 7,078,552

Net income/outgoing resources for the year includes:

2018

£ 2017

£ Fees payable to auditor - audit services 11,300 10,975

Fees payable to auditor - other audit services 3,320 3,125

Operating leases 45,612 49,043



7 Charitable activities

Total 2018

£

Total 2017

£ Direct costs 3,163,692 3,761,144

Support costs 2,263,684 3,150,836

5,427,376 6,911,980

Educational operations

£

Re- development expenditure

£

Total 2018

£

Total 2017

£

Analysis of support costs

Support staff costs 965,108 - 965,108 1,282,588 Depreciation 239,148 - 239,148 300,345 Premises costs 322,029 - 322,029 382,719 Other support costs 721,188 16,211 789,806 1,185,184

Total support costs 2,247,473 16,211 2,263,684 3,150,836

8 Staff

2018

£ 2017

£

Staff costs during the year were:

Wages and salaries 3,224,732 4,073,466 Social security costs 257,884 321,849 Pension costs 574,981 624,163

4,057,597 5,019,478



8 Staff (continued)

The average number of persons (including senior management team) employed by the Academy during the year expressed as average headcount was as follows:

2018

No 2017

No

Charitable Activities

Teachers 18 25 Non-teaching staff 135 168 153 193

Higher paid staff

The number of employees whose emoluments (excluding employer pension costs) exceeded £60,000 was:

2018

No 2017

No £60,001 - £70,000 2 2 £70,001 - £80,000 2 -

1 (2017 - 1) of the above employees participated in the Local Government Pension Scheme, pension contributions amounted to £8,885 (2017 - £7,867), 1 (2017 – nil) of the above employees participated in the Teachers’ Pension Scheme, pension contributions amounted to £11,987 (2017 - £nil), and 2 (2017 - 1) contributed to a defined contribution scheme, pension contributions amounted to £10,808 (2017 - £5,305).

The key management personnel of the Academy are as listed on page 1. The total amount of employee benefits (including employer pension contributions and employer national insurance contributions) received by key management personnel for their services to the Academy was £447,601 (2017 - £333,862). In addition £Nil (2017 - £274,740) was paid to other entities in respect of the services of key management personnel.

9 Trustees' remuneration and expenses

During the year the charity made payments to a trustee, Peter Burroughs, totalling £13,123 (2017 - £8,465) in relation to consultancy services, rather than for his services as a Trustee. The amount due to Peter Burroughs at the yearend was £12,030 (2017 - £Nil).

As permitted by the Memorandum and Articles of Association, during the year ended 31 August 2018, travel and subsistence expenses totalling £3,218 (2017 - £4,439) were reimbursed or paid directly to 3 trustees (2017 - 4).



10 Tangible fixed assets

Group

Freehold land and buildings

£

Plant and equipment

£ Motor vehicles

£

Assets under construction

£ Total

£

Cost

At 1 September 2017 11,142,907 2,532,353 95,224 4,089,075 17,859,559

Additions - 98,021 - 1,154,268 1,252,289

Disposals (8,966,290) (10,649) - - (8,976,939)

At 31 August 2018 2,176,617 2,619,725 95,224 5,243,343 10,134,909

Depreciation

At 1 September 2017 1,054,358 2,294,586 85,799 - 3,434,743

Charge for the year 124,851 117,643 4,712 - 247,206

Eliminated on disposals (1,166,080) (9,989) - - (1,176,069)

At 31 August 2018 13,129 2,402,240 90,511 - 2,505,880

Net book value

At 31 August 2018 2,163,488 217,485 4,713 5,243,343 7,629,029

At 31 August 2017 10,088,549 237,767 9,425 4,089,075 14,424,816



10 Tangible fixed assets (continued) Group (continued)


£

Plant and equipment

£ Motor vehicles

£


£ Total

£

Cost

At 1 September 2016 11,270,672 2,511,029 95,224 3,591,562 17,468,487 Impairment (127,765) - - - (127,765) Additions - 93,090 - 497,513 590,603 Disposals - (71,766) - - (71,766)

At 31 August 2017 11,142,907 2,532,353 95,224 4,089,075 17,859,559

Depreciation

At 1 September 2016 896,958 2,227,941 79,790 - 3,204,689 Charge for the year 157,400 136,936 6,009 - 300,345 Eliminated on disposals - (70,291) - - (70,291)

At 31 August 2017 1,054,358 2,294,586 85,799 - 3,434,743

Net book value

At 31 August 2017 10,088,549 237,767 9,425 4,089,075 14,424,816

At 31 August 2016 10,373,714 283,088 15,434 3,591,562 14,263,798



10 Tangible fixed assets (continued) Company


£

Plant and equipment

£ Motor vehicles

£


£ Total

£

Cost

At 1 September 2017 11,142,907 2,532,353 95,224 3,647,928 17,418,412

Additions - 98,021 - 51,796 149,817

Disposals (8,966,290) (10,649) - - (8,976,939)

At 31 August 2018 2,176,617 2,619,725 95,224 3,699,724 8,591,290

Depreciation

At 1 September 2017 1,054,358 2,294,586 85,799 - 3,434,743

Charge for the year 124,851 117,643 4,712 - 247,206

Eliminated on disposals (1,166,080) (9,989) - - (1,176,069)

At 31 August 2018 13,129 2,402,240 90,511 - 2,505,880

Net book value

At 31 August 2018 2,163,488 217,485 4,713 3,699,724 6,085,410

At 31 August 2017 10,088,549 237,767 9,425 3,647,928 13,983,669



10 Tangible fixed assets (continued) Company (continued)


£

Plant and equipment

£ Motor vehicles

£


£ Total

£

Cost

At 1 September 2016 11,270,672 2,511,029 95,224 3,591,562 17,468,487 Impairment (127,765) - - - (127,765) Additions - 93,090 - 56,366 149,456 Disposals - (71,766) - - (71,766)

At 31 August 2017 11,142,907 2,532,353 95,224 3,647,928 17,418,412

Depreciation

At 1 September 2016 896,958 2,227,941 79,790 - 3,204,689 Charge for the year 157,400 136,936 6,009 - 300,345 Eliminated on disposals - (70,291) - - (70,291)

At 31 August 2017 1,054,358 2,294,586 85,799 - 3,434,743

Net book value

At 31 August 2017 10,088,549 237,767 9,425 3,647,928 13,983,669

At 31 August 2016 10,373,714 283,088 15,434 3,591,562 14,263,798



11 Investments

Company

The Academy owns 100% of the Ordinary shares of Exeter Deaf Academy Trading Limited, a company incorporated in England and Wales (company number: 08172970, registered office: 50 Topsham Road, Exeter, Devon, EX2 4NF). The principal activity of the company is the development of a new site for Exeter Royal Academy for Deaf Education. Turnover for the year ended 31 August 2018 was £Nil (2017 - £nil), expenditure was £26,696 (2017 - £16,696) and the profit/(loss) for the year was (£26,696) (2017 – (£16,696)). The assets of the company at 31 August 2018 were £1,558,387 (2017 - £486,767), liabilities were £1,612,487 (2017 - £514,171) and capital and reserves were (£54,100) (2017 – (£27,404)).

Group and Company Quoted Investments

2018 2017

£ £

Market value brought forward 653,090 1,525,693

Disposals (382,354) (906,683)

Revaluation (8,565) 34,080

Market value carried forward 262,171 653,090

Historical cost 216,213 415,672

12 Debtors: amounts due within one year

Group Company

2018

£ 2017

£ 2018

£ 2017

£ Trade debtors 13,178 56,622 13,178 56,622 Prepayments 32,508 32,947 32,508 32,947 Amounts due from subsidiary undertaking - - 1,475,932 299,221 Other debtors 36,572 76,174 21,976 33,003 82,258 165,743 1,543,594 421,793

13 Debtors: amounts due after one year

Group Company

2018

£ 2017

£ 2018

£ 2017

£

Retentions 1,230,280 - 1,230,280 -



14 Creditors: amounts falling due within one year

Group Company

2018

£ 2017

£ 2018

£ 2017

£ Trade creditors 809,123 991,069 739,574 792,388

Other taxation and social security 73,051 71,262 73,051

71,262 Bank loans - 9,700 - 9,700 Other creditors 70,167 531,042 70,167 531,042 Accruals and deferred income 264,831 2,722,611 197,825 2,706,342 1,217,172 4,325,684 1,080,617 4,110,734

In the prior year, the charity had a bank loan totalling £248,850 which was repayable over 7 years from July 2016. Interest was fixed for 7 years at 3.21%. During the year ended 31 August 2018, this loan was repaid in full.

15 Creditors: amounts falling due after one year

Group Company

2018

£ 2017

£ 2018

£ 2017

£ Bank loans - 239,150 - 239,150 Other creditors 400,000 400,000 400,000 400,000 400,000 639,150 400,000 639,150



16 Funds

Group

Balance at 1 September

2017 £

Incoming resources

£

Resources expended

£

Gains, losses and

transfers £

Balance at 31 August

2018 £

Restricted funds

WK Hutchings Family Support 182 12,000 (10,051) - 2,131

Other restricted funds 12,551 5,610 (4,871) - 13,290

12,733 17,610 (14,922) - 15,421

New Build Fundraising Campaign 832,255 169,866 (16,871) - 985,250

Total restricted funds 844,988 187,476 (31,793) - 1,000,671

Unrestricted funds

Revaluation fund 6,809,633 - - (6,668,046) 141,587

Other unrestricted funds (4,532,539) 4,512,522 (5,583,348) 12,603,280 6,999,915

Total unrestricted funds 2,277,094 4,512,522 (5,583,348) 5,935,234 7,141,502

Total funds 3,122,082 4,699,998 (5,615,141) 5,935,234 8,142,173

The restricted funds are set up for the following purposes: WK Hutchings Family Support - To enable sign language and support to be delivered to families over a series of weekends. Other restricted funds - various smaller projects mainly in connection with video technology, ICT, Sensory Pod, Sports & PE and Literacy.



16 Funds (continued)

Balance at 1 September

2016 £

Incoming resources

£

Resources expended

£

Gains, losses and

transfers £

Balance at 31 August

2017 £

Restricted funds

CAD/CAM Equipment D&T Fund 2,680 - (2,680) - - WK Hutchings Family Support 11,957 - (11,775) - 182 Other restricted funds 15,115 5,621 (8,185) - 12,551 29,752 5,621 (22,640) - 12,733 New Build Fundraising Campaign 802,984 31,466 (2,195) - 832,255

Total restricted funds 832,736 37,087 (24,835) - 844,988

Unrestricted funds

Revaluation fund 7,262,814 - - (453,181) 6,809,633

Other unrestricted funds (2,691,711) 5,494,076 (7,053,717)

(281,187) (4,532,539)

Total unrestricted funds 4,571,103 5,494,076 (7,053,717) (734,368) 2,277,094

Total funds 5,403,839 5,531,163 (7,078,552) (734,368) 3,122,082

The restricted funds are set up for the following purposes: CAD/CAM Equipment - purchase of specialised equipment for student use for Design & Technology. WK Hutchings Family Support - To enable sign language and support to be delivered to families over a series of weekends. Other restricted funds - various smaller projects mainly in connection with video technology, ICT, Sensory Pod, Sports & PE and Literacy.

Included within unrestricted funds of the company and group are revaluation reserve funds of £141,587 (2017: £6,809,633). This comprises £95,629 (2017: £6,572,214) in respect of the revaluation of tangible fixed assets and £45,958 (2017: £237,419) in respect of the revaluation of investments.



17 Analysis of net assets between funds

Fund balances at 31 August 2018 are represented by:

Group

Unrestricted funds

£

Restricted funds

£ Total funds

£ Tangible fixed assets 7,593,130 35,899 7,629,029

Investments 262,171 - 262,171

Current assets 7,422,373 964,772 8,387,145

Current liabilities (1,217,172) - (1,217,172)

Creditors over 1 year (400,000) - (400,000)

Pension scheme liability (6,519,000) - (6,519,000)

Total net assets 7,141,502 1,000,671 8,142,173

Fund balances at 31 August 2017 are represented by:

Group

Unrestricted funds

£

Restricted funds

£ Total funds

£ Tangible fixed assets 14,413,692 11,124 14,424,816 Investments 653,090 - 653,090 Current assets 299,545 833,864 1,133,409 Current liabilities (4,339,083) - (4,339,083) Creditors over 1 year (639,150) - (639,150) Pension scheme liability (8,111,000) - (8,111,000)

Total net assets 2,277,094 844,988 3,122,082



18 Commitments under operating leases

Group and Company

Operating leases

At 31 August 2018 the Group and Company had total future commitments under non-cancellable operating leases as follows:

Operating leases which expire:

2018

£ 2017

£

Other

Within one year 47,948 49,043 Within two to five years 51,358 86,724 After five years 5,508 -

104,814 135,767



19 Reconciliation of net (expenditure)/income to net cash inflow/(outflow) from operating activities

2018

£ 2017

£ Net (expenditure)/income (915,143) (1,547,389) Depreciation 247,206 300,345 Investment income (21,630) (32,384) Gain on disposal of tangible fixed assets - 1,475

Pension scheme charges in excess of cash paid 333,000 317,000 (Increase) in debtors (1,146,795) (83,615) (Decrease) in creditors (3,098,812) (5,521)

Net cash outflow from operating activities (4,602,174) (1,050,089)

20 Cash flows from financing activities

2018

£ 2017

£ Investment income 21,630 32,384

Repayment of bank borrowings (248,850) (9,394)

Net cash provided by financing activities (227,220) 22,990

21 Cash flows from investing activities

2018

£ 2017

£ Purchase of tangible fixed assets (1,252,289) (590,603) Proceeds from the sale of tangible fixed assets 11,772,023 - Proceeds from sale of investments 430,000 1,000,000

Net cash provided by/(used in) investing activities 10,949,734 409,397

22 Analysis of cash and cash equivalents

At 31 August 2018

£

At 31 August 2017

£ Cash at bank and in hand 7,074,607 954,267

Total cash and cash equivalents 7,074,607 954,267

23 Members' liability

The company is limited by guarantee and has no share capital. In the event of a winding up the liability of the members is limited to £1 each.



24 Pension and similar obligations

The Academy's employees belong to three principal pension schemes: the Teachers’ Pension Scheme England and Wales (TPS) for academic and related staff; and the Local Government Pension Scheme (LGPS) for non-teaching staff, which is managed by Devon County Council and Aegon. Both the TPS and the LGPS are multi-employer defined benefit schemes, Aegon is a defined contribution pension scheme. The latest actuarial valuation of the TPS related to the period ended 31 March 2012 and of the LGPS 31 March 2016. There were no outstanding or prepaid contributions at either the beginning or the end of the financial year.

Teachers' Pension Scheme

Introduction The Teachers' Pension Scheme (TPS) is a statutory, contributory, defined benefit scheme, governed by the Teachers' Pensions Regulations (2010) and, from 1 April 2014, by the Teachers’ Pension Scheme Regulations 2014. Membership is automatic for full-time teachers in academies and, from 1 January 2007, automatic for teachers in part-time employment following appointment or a change of contract, although they are able to opt out.

The TPS is an unfunded scheme and members contribute on a ‘pay as you go’ basis - these contributions along with those made by employers are credited to the Exchequer. Retirement and other pension benefits are paid by public funds provided by Parliament.

Valuation of the Teachers' Pension Scheme The Government Actuary, using normal actuarial principles, conducts a formal actuarial review of the TPS in accordance with the Public Service Pensions (Valuations and Employer Cost Cap) Directions 2014 published by HM Treasury. The aim of the review is to specify the level of future contributions. Actuarial scheme valuations are dependent on assumptions about the value of future costs, design of benefits and many other factors. The latest actuarial valuation of the TPS was carried out as at 31 March 2012 and in accordance with the Public Service Pensions (Valuations and Employer Cost Cap) Directions 2014. The valuation report was published by the Department for Education on 9 June 2014.

The key elements of the valuation and subsequent consultation are:

• employer contribution rates set at 16.48% of pensionable pay (including a 0.08% employer administration charge (currently 14.1%))

• total scheme liabilities (pensions currently in payment and the estimated cost of future benefits) for service to the effective date of £191,500 million, and notional assets (estimated future contributions together with the notional investments held at the valuation date) of £176,600 million giving a notional past service deficit of £14,900 million

• an employer cost cap of 10.9% of pensionable pay will be applied to future valuations

• the assumed real rate of return is 3.0% in excess of prices and 2% in excess of earnings. The rate of real earnings growth is assumed to be 2.75%. The assumed nominal rate of return is 5.06%.



24 Pension and similar obligations (continued) The TPS valuation for 2012 determined an employer rate of 16.4%, which was payable from September 2015. The next valuation of the TPS is currently underway based on April 2016 data, whereupon the employer contribution rate is expected to be reassessed and will be payable from 1 April 2019.

The employer’s pension costs paid to TPS in the year amounted to £112,347 (2017 - £124,202).

Under the definitions set out in Financial Reporting Standard 102 (FRS 102), the TPS is an unfunded multi-employer pension scheme. The Academy has accounted for its contributions to the scheme as if it were a defined contribution scheme. The Academy has set out above the information available on the scheme.

Local government pension scheme The LGPS is a funded defined-benefit scheme, with the assets held in separate trustee-administered funds. The total contribution made for the year ended 31 August 2018 was £226,000 (2017 - £252,000), of which employer's contributions totalled £180,000 (2017 - £185,000) and employees' contributions totalled £46,000 (2017 - £67,000). The agreed contribution rates for future years are 14% for employers plus an additional top up for the past service deficit and 5.5% to 12.5% for employees.

Principal actuarial assumptions

At 31 August 2018

%

At 31 August 2017

% Rate of increase in salaries 3.80 4.20 Rate of increase for pensions in payment/inflation 2.30 2.70 Discount rate for scheme liabilities 2.65 2.60

The current mortality assumptions include sufficient allowance for future improvements in the mortality rates. The assumed life expectations on retirement age 65 are:

At 31 August

2018 At 31 August

2017

Retiring today

Males retiring today 23.5 23.4 Females retiring today 25.6 25.5

Retiring in 20 years

Males retiring in 20 years 25.8 25.7 Females retiring in 20 years 28.0 27.9



24 Pension and similar obligations (continued)

Sensitivity analysis on present value of scheme obligations

At 31 August 2018

£

At 31 August 2017

£ Discount rate +0.1% 14,332,000 15,437,000 Discount rate -0.1% 15,026,000 16,186,000 Mortality assumption – 1 year increase 15,186,000 16,351,000 Mortality assumption – 1 year decrease 14,181,000 15,282,000 CPI rate +0.1% 14,974,000 16,109,000 CPI rate -0.1% 14,384,000 15,512,000

The actual return on scheme assets was £481,000 (2017 - £808,000).

Amounts recognised in the statement of financial activities

2018

£ 2017

£ Current service cost 299,000 344,000 Interest cost 209,000 153,000 Admin expenses 5,000 5,000

Total amount recognised in the SOFA 513,000 502,000

Changes in the present value of defined benefit obligations were as follows:

2018

£ 2017

£ At start of period 15,807,000 13,733,000 Current service cost 295,000 344,000 Interest cost 404,000 296,000 Admin expenses 5,000 5,000

Employee contributions 46,000 67,000 Actuarial (gain)/loss (1,644,000) (496,000) Losses or gains on curtailments - 2,014,000 Past service costs (including curtailments) 4,000 -

Benefits paid (242,000) (156,000)

At 31 August 14,675,000 15,807,000



24 Pension and similar obligations (continued)

Changes in the fair value of academy's share of scheme assets:

2018

£ 2017

£ At start of period 7,696,000 6,673,000 Interest income 195,000 143,000 Actuarial gain/(loss) 281,000 784,000 Employer contributions 180,000 185,000 Employee contributions 46,000 67,000 Benefits paid (242,000) (156,000)

At 31 August 8,156,000 7,696,000

Deficit 6,519,000 8,111,000 Aegon Pension Scheme

The Aegon Pension Scheme is a defined contribution scheme. The total contribution made for the year ended 31 August 2018 was £160,183 (2017 - £192,302), of which employer's contributions totalled £121,627 (2017 - £145,622) and employees' contributions totalled £38,556 (2017 - £46,680).

25 Related party transactions

During the year the charity made purchases totalling £72 (2017 - £Nil) from Kitsons LLP, a firm where Mr R Davey is joint managing partner. The balance at the yearend was £Nil (2017 - £Nil). The company has taken advantage of the exemption under FRS102 from the disclosure of transactions with its wholly owned subsidiary.

26 Events after the end of the reporting period

On 28 December 2018, the charity entered into an Option agreement with Burrington Estates Limited for the sale of Mount Radford Lawn. The Charity signed the construction contract with Midas Construction Limited on 15 February 2019 for the construction of the new school in Exmouth. On 28 February 2019, planning permission was granted for the Hill Barton site.

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